Silicon Valley Bank (SVB) Collapses

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KrisZ said:
So we borrow from ourselves and then pay interest to ourselves as well?

Then we have “foreign” owed debt. Ok, how did they pay us? Their own fiat currencies?
what is the collateral for our debt?

Somehow these types of discussions never go into real details, just generalities.
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Foreign governments sell their home currency, buy US dollars, and then buy Treasury bonds, bills, and notes. You asked who owns our debt. I provided you with the official accounting from the Treasury. Now please if you have something to say then say it...plainly.
 
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PWMDMD said:
Foreign governments sell their home currency, buy US dollars, and then buy Treasury bonds, bills, and notes. You asked who owns our debt. I provided you with the official accounting from the Treasury. Now please if you have something to say then say it...plainly.
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Not going to say anything just judging what people think. If it makes sense to you, great. It doesn't to me. Bills, bonds, notes, all worthless paper.
 
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KrisZ said:
Not going to say anything just judging what people think. If it makes sense to you, great. It doesn't to me. Bills, bonds, notes, all worthless paper.
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Huh? Treasury bills, bonds, and notes are contracts that say if you give the US gov money they promise to return your money plus interest after a certain period of time. They are as real as any other loan...the reasons for paying interest are as real as any loan. They aren't worthless if after giving the US government $1000 I get back $1000 + interest.
 
The banks are fairly corrupt in how they trade money stocks, bonds etc to have a certain reserve of value. My mom was a big muckety muck in a CFO level of employment in a major bank who's name would be recognized by all. Mom said banks are fairly corrupt in their operation to stay in business and profit.
 
PWMDMD said:
Huh? Treasury bills, bonds, and notes are contracts that say if you give the US gov money they promise to return your money plus interest after a certain period of time. They are as real as any other loan...the reasons for paying interest are as real as any loan. They aren't worthless if after giving the US government $1000 I get back $1000 + interest.
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That's the bit I'm after. Are you telling me that the federal Reserve loans $1000 of worthless paper and then expects back a $1000+interest of that same worthless paper?
See there is a reason we are not on gold standard, that's because the '+interest" part was paid in exactly that, gold and then it run out. That is why I'm asking what are we paying the interest with now that the gold is gone? It cannot be with the worthless paper.
 
KrisZ said:
That's the bit I'm after. Are you telling me that the federal Reserve loans $1000 of worthless paper and then expects back a $1000+interest of that same worthless paper?
See there is a reason we are not on gold standard, that's because the '+interest" part was paid in exactly that, gold and then it run out. That is why I'm asking what are we paying the interest with now that the gold is gone? It cannot be with the worthless paper.
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What? I'm confused. No, YOU loan the US government the $1000 that they then use to fund the government and then they replay it back to you with interest.
 
KrisZ said:
Repay with what?
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I'm tired of going down this weird rabbit hole with no bottom. This started out as you asking who owns our debt and then laughing at the answer. PLEASE STOP BEING CRYPTIC AND GET TO YOUR POINT or I assume you have no idea what you're talking about and you have no point.
 
As the population and economy expand, new money must be introduced into the system so that people who already have money are able to hold on to what they have.

Gold standards are unworkable because gold cannot be mined fast enough to meet the need. It leads to a lot of pointless effort of mining gold (only to immediately place it back underground in a vault) and fighting wars to capture gold-rich territory which is just as likely to be useless for anything else.

The money that SVB "lost" was in Treasury bonds, so it sort of looks like a zero sum game for the government to print more to replace it.
 
wpod said:
The banks are fairly corrupt in how they trade money stocks, bonds etc to have a certain reserve of value. My mom was a big muckety muck in a CFO level of employment in a major bank who's name would be recognized by all. Mom said banks are fairly corrupt in their operation to stay in business and profit.
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Business is brutal. And powerful.
 
mk378 said:
As the population and economy expand, new money must be introduced into the system so that people who already have money are able to hold on to what they have.

Gold standards are unworkable because gold cannot be mined fast enough to meet the need. It leads to a lot of pointless effort of mining gold (only to immediately place it back underground in a vault) and fighting wars to capture gold-rich territory which is just as likely to be useless for anything else.

The money that SVB "lost" was in Treasury bonds, so it sort of looks like a zero sum game for the government to print more to replace it.
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Yup
 
PWMDMD said:
I'm tired of going down this weird rabbit hole with no bottom. This started out as you asking who owns our debt and then laughing at the answer. PLEASE STOP BEING CRYPTIC AND GET TO YOUR POINT or I assume you have no idea what you're talking about and you have no point.
Click to expand...

Yes, I do not know what we are paying back with. I know gold is gone, so it must be something else. I wasn't laughing at your answer, just questioning your link and understanding of them. I know that if you think for a moment, you will realize that federal reserve doesn't loan U.S. government $1000 and then gets back that same $1000 +interest in the same currency that they themselves (federal reserve) issued. If all other currencies are issued in the same manner, which they 100% are, then with what exactly all these central banks are getting paid back in?

Not expecting to get an answer from you or anybody else. But it's quite interesting to think about and ponder IMO.
 
KrisZ said:
That's the bit I'm after. Are you telling me that the federal Reserve loans $1000 of worthless paper and then expects back a $1000+interest of that same worthless paper?
See there is a reason we are not on gold standard, that's because the '+interest" part was paid in exactly that, gold and then it run out. That is why I'm asking what are we paying the interest with now that the gold is gone? It cannot be with the worthless paper.
Click to expand...
The gvt is not loaning anything; they are borrowing by selling securities which are loans to them.
You purchase the security (bond, t-bill, etc). You get interest and your principal back. You are the lender, not the gvt.
The security becomes your asset.

In the case of SVB, as a bank they purchase assets of various types and terms. A high percentage of their assets were long term that could only be sold at discount because of today's higher rates. Short term liquidity became a fatal problem for SVB.
 
JeffKeryk said:
The gvt is not loaning anything; they are borrowing by selling securities which are loans to them.
You purchase the security (bond, t-bill, etc). You get interest and your principal back. You are the lender, not the gvt.
The security becomes your asset.

In the case of SVB, as a bank they purchase assets of various types and terms. A high percentage of their assets were long term that could only be sold at discount because of today's higher rates. Short term liquidity became a fatal problem for SVB.
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Who said the government is loaning anything?
 
KrisZ said:
Yes, I do not know what we are paying back with. I know gold is gone, so it must be something else. I wasn't laughing at your answer, just questioning your link and understanding of them. I know that if you think for a moment, you will realize that federal reserve doesn't loan U.S. government $1000 and then gets back that same $1000 +interest in the same currency that they themselves (federal reserve) issued. If all other currencies are issued in the same manner, which they 100% are, then with what exactly all these central banks are getting paid back in?

Not expecting to get an answer from you or anybody else. But it's quite interesting to think about and ponder IMO.
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1. The Federal Reserve doesn't issue debt. The Treasury issues debt and it issues it directly to people, countries, businesses, etc. The Federal Reserve will buy Treasuries onn the open market from people/businesses as a way of controlling the money supply based on monetary policy. When the Fed buys treasuries on the open market for dollars those dollars are released into circulation increasing the money supply. When the Fed sells treasuries for dollars on the open market those dollars are effectively removed from circulation decreasing the money supply.

2. The Treasury is funded through taxes.
 
For those who lament the good old days of the gold standard. What does a country do when growth outpaces its ability to mine gold? What happens when that gold runs out? Stop growing? Eliminate some useless portion of the population so the useful people can maintain the value of the very finite quantity of money available in existence? The fact is inflation/devaluation of money = growth.
 
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